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For the first time in some years, institutional construction activity growth is expected to exceed its commercial counterparts. The major commercial sectors are feeling the headwinds of a mollifying economy, while demographic forces are still driving the key institutional sectors.
Retail Construction Trends
The retail industry and its activities continue to experience blows from the advent and steadily growing trend of online shopping thanks in major part to the accessibility, convenience, and speed it brings to the experience. While only having about 10% of total sales, e-commerce has been moving nowhere but upward at about thrice the rate of traditional offline sales. Of course, without the need for offline stores and physical shops, construction endeavors have also slowed down.
Commercial Construction Trends
Office construction looks to be the strongest commercial sector, with 5 percent growth projected for this year and 1 percent in 2020. This sector has benefited from strong job growth, and the apparent bottoming out of the years-long decline in office space per employee. Much of the increase has come from the booming technology sector, so the outlook is dependent on continued growth in this industry sector.
Education Construction Trends
Education facilities are the largest non-residential building sector, accounting for over 20% of overall spending. Public and private schools, colleges, and whole university campuses are the bread and butter of the construction industry, which is a testament to the younger generation’s desire to learn and acquire knowledge. While demographic trends are generally complimentary to the education construction outlook, fiscal developments are the real engine for growth.
Healthcare Construction Trends
Healthcare building spending is benefiting from favourable demographics, but growth has been compromised by ambiguous operations and modifications to the federal Affordable Care Act. The outlook appears to be a bit brighter now and the panel is requesting for 4% growth this year and an additional 3.6% in the next.
Non-Residential Building Construction Trends
The non-residential building construction outlook may best be defined as advancing from tightknit contemporary conditions but tempered by upward uncertainty over the bigger picture of economic trends.
The fact that architecture firms and construction companies had a solid last year bodes well for healthy progression continuing in construction activity through this year. However, AIA recently surveyed architecture firms and construction companies about their expectations for revenue growth in 2019, which are more mitigated.
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